Optimism on the increase but many SMEs still risk-averse and cautious over plans

FORTY per cent of small and medium-sized enterprises (SMEs) in Yorkshire and the North East are confident about growth opportunities for their businesses over the next 12 months, but many remain cautious about investing in resources, research suggests.
Neil SevittNeil Sevitt
Neil Sevitt

The survey, carried out by Baker Tilly, found that 44 per cent of SMEs in the region said they expected to increase turnover by five per cent or more in the next 12 months, but 79 per cent were not prepared to take on more debt to expand.

The survey questioned 750 SMEs across the UK, including 96 in Yorkshire and the North East, about their expectations, opinions and priorities for the coming year.

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Nineteen per cent of those surveyed said they plan to take on new staff within the next 12 months, marginally higher than the national figure of 18 per cent.

Seventeen per cent said they planned to increase their capital expenditure, 29 per cent planned to increase their sales and marketing spend, and 19 per cent planned to up their R&D spend.

Baker Tilly said that although 73 per cent of SMEs in the region experienced some form of uplift in turnover last year, overall, the research revealed the majority of SMEs surveyed were “extremely risk-adverse” and cautious about their business growth plans for the next 12 months.

Neil Sevitt, partner at Baker Tilly and SME specialist who is based in Leeds, said: “Over the last few years, SMEs in the region have faced extremely challenging market conditions, but there is now a real optimism emerging around the prospects for growth.

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“That said, the caution being expressed by local firms is a cause for concern.

“There needs to be more emphasis on research and development and more time dedicated to exploring international opportunities if SMEs are going to benefit from the economic upturn.

“If SMEs do not take a long-term view and ignore opportunities for investment and expansion, economic recovery will remain hesitant and uneven.

“Businesses need to take more courageous and strategic decisions and make the best use of tax incentives and Government assistance available to them.”

The research was conducted online by Baker Tilly in partnership with Atomik Research.